Fergus Ewing asks for Scotland's share of USO fund
The war of words between Westminster and parts of the Scottish Government continue and the Universal Service Obligation is firmly in the headlights of the Rural economy secretary Fergus Ewing.
Mr Ewing is trying to extract a promise from the Culture Secretary Matt Hancock that the USO will tie in with the R100 project and that Scotland will receive its fair share of the USO fund.
There are some realities that make this difficult or impossible to achieve without actually causing a lot more work, for example the USO should come into effect on 1st January 2020 and the R100 is currently slated for completion by 31st December 2021, so there is potential for people in Scotland to be within scope of the USO but still be in the R100 plans. This is not unique to Scotland, other areas of the UK with their less powerful councils will likely still have superfast roll-outs going on in 2020. Additionally the R100 and other BDUK inspired projects are led by public money and large contracts that are unsuited to intervening for those 3 homes in a central Glasgow street without access to the 10/1 USO minimum and the broadband USO is designed to be funded and run by industry and if Ofcom implement it right should give alternate operators a growth opportunity and not just those large enough to win massive tenders.
A core principle of any levy or tax is that if lots of people contribute then the burden for any individual is not too big but the benefit for those the money provides help for is significant. If an exemption for the industry levy is granted to Scotland then every other elected body with plans for 100% superfast coverage will also be seeking an exemption for their area.
While no sum has been mentioned for the USO levy, if it was for example 50p per month from the millions of existing broadband connections and if Scotland had 2,500,000 connections paying in that would amount to £15 million a year, a massive amount for an individual if dumped in their bank account, but the R100 project has an initial budget of £600 million for delivering superfast broadband to around 176,000 premises (number should decrease as 2018 progresses) giving a per property budget of £3,400.
To put the scale of the money being spent on the R100 project into perspective if a similar level of spending had took place on the BDUK scheme we would be talking of a £19 billion BDUK scheme rather than arguing over the spending that is in the £1 billion to £1.7 billion. There are also hints that the R100 £600 million may not be the total or even reach an absolute 100% figure.
While Scotland and the bulk of the rural areas missing out on superfast broadband speeds are very remote if the R100 does not deliver the majority of its connections via full fibre it will have wasted a once in a century sum of money to achieve that aim.
The press coverage around these statements is always a little odd and how the broadband USO works is often slightly twisted, e.g. the idea that Westminster will deliver 10 Mbps to 100% of premises. Westminster delivered the legislation and direction for the USO but implementation has been handed off to Ofcom and success will very much depend on how the broadband industry reacts in terms of offering solutions that meet the criteria. The hope we are certain from Westminster and Ofcom is that while a minimum of 10 Mbps down and 1 Mbps is set, that lots of connections delivered will have simple upgrades to faster speeds or even the basic service will more than exceed the minimum level and tick the superfast box at the same time.
For avoidance of doubt, the broadband USO is not going to be a roll-out programme, it is an on-demand scheme, so individuals or groups of people who have sub USO standard broadband can demand their USO or better connection, how and who people request this via is what we do not know and neither do we know what penalties may exist if all the broadband industry ignores or fails to meet a request.